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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 001-34841
NXP Semiconductors N.V.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Netherlands | | 98-1144352 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. employer identification number) |
| | |
60 High Tech Campus | | 5656 AG |
Eindhoven | |
Netherlands | |
(Address of principal executive offices) | | (Zip code) |
| | | | | | | | | | | |
| +31 | 40 | 2729999 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common shares, EUR 0.20 par value | NXPI | The Nasdaq Global Select Market |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of July 22, 2022, there were 262,598,471 shares of our common stock, €0.20 par value per share, issued and outstanding.
NXP Semiconductors N.V.
Form 10-Q
For the Fiscal Quarter Ended July 3, 2022
TABLE OF CONTENTS
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ in millions, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 |
Revenue | 3,312 | | | 2,596 | | | 6,448 | | | 5,163 | |
Cost of revenue | (1,430) | | | (1,174) | | | (2,789) | | | (2,386) | |
Gross profit | 1,882 | | | 1,422 | | | 3,659 | | | 2,777 | |
Research and development | (542) | | | (476) | | | (1,060) | | | (937) | |
Selling, general and administrative | (265) | | | (234) | | | (516) | | | (456) | |
Amortization of acquisition-related intangible assets | (134) | | | (139) | | | (269) | | | (319) | |
Total operating expenses | (941) | | | (849) | | | (1,845) | | | (1,712) | |
Other income (expense) | 2 | | | — | | | 2 | | | — | |
Operating income (loss) | 943 | | | 573 | | | 1,816 | | | 1,065 | |
Financial income (expense): | | | | | | | |
Extinguishment of debt | (18) | | | — | | | (18) | | | — | |
Other financial income (expense) | (110) | | | (100) | | | (215) | | | (187) | |
Income (loss) before income taxes | 815 | | | 473 | | | 1,583 | | | 878 | |
Benefit (provision) for income taxes | (129) | | | (65) | | | (243) | | | (105) | |
Results relating to equity-accounted investees | (3) | | | (2) | | | 9 | | | (3) | |
Net income (loss) | 683 | | | 406 | | | 1,349 | | | 770 | |
Less: Net income (loss) attributable to non-controlling interests | 13 | | | 9 | | | 22 | | | 20 | |
Net income (loss) attributable to stockholders | 670 | | | 397 | | | 1,327 | | | 750 | |
| | | | | | | |
Earnings per share data: | | | | | | | |
Net income (loss) per common share attributable to stockholders in $ | | | | | | | |
Basic | 2.55 | | | 1.46 | | | 5.05 | | | 2.73 | |
Diluted | 2.53 | | | 1.42 | | | 5.01 | | | 2.67 | |
| | | | | | | |
Weighted average number of shares of common stock outstanding during the period (in thousands): | | | | | | | |
Basic | 262,579 | | | 272,686 | | | 262,837 | | | 275,145 | |
Diluted | 264,692 | | | 278,735 | | | 264,909 | | | 281,063 | |
See accompanying notes to the Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
($ in millions, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 |
Net income (loss) | 683 | | | 406 | | | 1,349 | | | 770 | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Change in fair value cash flow hedges | (8) | | | — | | | (12) | | | (14) | |
Change in foreign currency translation adjustment | (69) | | | 9 | | | (87) | | | (33) | |
Change in net actuarial gain (loss) | (1) | | | — | | | (1) | | | — | |
| | | | | | | |
Total other comprehensive income (loss) | (78) | | | 9 | | | (100) | | | (47) | |
Total comprehensive income (loss) | 605 | | | 415 | | | 1,249 | | | 723 | |
Less: Comprehensive income (loss) attributable to non-controlling interests | 13 | | | 9 | | | 22 | | | 20 | |
Total comprehensive income (loss) attributable to stockholders | 592 | | | 406 | | | 1,227 | | | 703 | |
See accompanying notes to the Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in millions, unless otherwise stated)
| | | | | | | | | | | | | | |
| | July 3, 2022 | | December 31, 2021 |
ASSETS | | | |
Current assets: | | | |
| Cash and cash equivalents | 3,545 | | | 2,830 | |
| Accounts receivable, net | 996 | | | 923 | |
| | | | |
| Inventories, net | 1,462 | | | 1,189 | |
| Other current assets | 317 | | | 286 | |
Total current assets | 6,320 | | | 5,228 | |
Non-current assets: | | | |
| Other non-current assets | 1,848 | | | 1,346 | |
| Property, plant and equipment, net of accumulated depreciation of $4,931 and $4,676 | 2,914 | | | 2,635 | |
| Identified intangible assets, net of accumulated amortization of $3,111 and $3,021 | 1,527 | | | 1,694 | |
| Goodwill | 9,930 | | | 9,961 | |
| Total non-current assets | 16,219 | | | 15,636 | |
Total assets | 22,539 | | | 20,864 | |
| | | |
LIABILITIES AND EQUITY | | | |
Current liabilities: | | | |
| Accounts payable | 1,462 | | | 1,252 | |
| | | | |
| Restructuring liabilities-current | 12 | | | 25 | |
| Other current liabilities | 1,467 | | | 1,175 | |
| | | | |
Total current liabilities | 2,941 | | | 2,452 | |
Non-current liabilities: | | | |
| Long-term debt | 11,160 | | | 10,572 | |
| Restructuring liabilities | 12 | | | 12 | |
| Deferred tax liabilities | 41 | | | 57 | |
| Other non-current liabilities | 1,159 | | | 1,001 | |
Total non-current liabilities | 12,372 | | | 11,642 | |
Total liabilities | 15,313 | | | 14,094 | |
Equity: | | | |
| Non-controlling interests | 264 | | | 242 | |
| | | | |
| Stockholders’ equity: | | | |
| Common stock, par value €0.20 per share: | 56 | | | 56 | |
| Capital in excess of par value | 13,904 | | | 13,727 | |
| Treasury shares, at cost: | | | |
| 11,924,962 shares (2021: 9,569,359 shares) | (2,424) | | | (1,932) | |
| Accumulated other comprehensive income (loss) | (52) | | | 48 | |
| Accumulated deficit | (4,522) | | | (5,371) | |
| Total stockholders’ equity | 6,962 | | | 6,528 | |
Total equity | 7,226 | | | 6,770 | |
Total liabilities and equity | 22,539 | | | 20,864 | |
See accompanying notes to the Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in millions, unless otherwise stated)
| | | | | | | | | | | |
| For the six months ended |
| July 3, 2022 | | July 4, 2021 |
Cash flows from operating activities: | | | |
Net income (loss) | 1,349 | | | 770 | |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | |
Depreciation and amortization | 627 | | | 646 | |
Share-based compensation | 178 | | | 184 | |
Amortization of discount (premium) on debt, net | 1 | | | 1 | |
Amortization of debt issuance costs | 3 | | | 3 | |
Net (gain) loss on sale of assets | (1) | | | — | |
(Gain) loss on equity security, net | 4 | | | 2 | |
(Gain) loss on extinguishment of debt | 18 | | | — | |
Results relating to equity-accounted investees | (9) | | | 3 | |
Deferred tax expense (benefit) | (98) | | | 12 | |
Changes in operating assets and liabilities: | | | |
(Increase) decrease in receivables and other current assets | (111) | | | (230) | |
(Increase) decrease in inventories | (273) | | | (86) | |
Increase (decrease) in accounts payable and other liabilities | 270 | | | 124 | |
Decrease (increase) in other non-current assets | (288) | | | (60) | |
Exchange differences | (3) | | | — | |
Other items | 8 | | | (1) | |
Net cash provided by (used for) operating activities | 1,675 | | | 1,368 | |
Cash flows from investing activities: | | | |
Purchase of identified intangible assets | (72) | | | (72) | |
Capital expenditures on property, plant and equipment | (548) | | | (300) | |
Purchase of equipment leased to others | (5) | | | — | |
| | | |
Proceeds from disposals of property, plant and equipment | 1 | | | — | |
Purchase of interests in businesses, net of cash acquired | (5) | | | (1) | |
| | | |
Purchase of investments | (2) | | | (6) | |
Proceeds from sale of investments | 12 | | | 8 | |
Proceeds from return of equity investment | 2 | | | 1 | |
Net cash provided by (used for) investing activities | (617) | | | (370) | |
Cash flows from financing activities: | | | |
Repurchase of long-term debt | (917) | | | — | |
| | | |
Proceeds from the issuance of long-term debt | 1,496 | | | 2,000 | |
Cash paid for debt issuance costs | (13) | | | (22) | |
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Dividends paid to common stockholders | (371) | | | (260) | |
Proceeds from issuance of common stock through stock plans | 28 | | | 31 | |
Purchase of treasury shares and restricted stock unit withholdings | (554) | | | (2,108) | |
Other, net | (1) | | | (1) | |
Net cash provided by (used for) financing activities | (332) | | | (360) | |
Effect of changes in exchange rates on cash positions | (11) | | | (3) | |
Increase (decrease) in cash and cash equivalents | 715 | | | 635 | |
Cash and cash equivalents at beginning of period | 2,830 | | | 2,275 | |
Cash and cash equivalents at end of period | 3,545 | | | 2,910 | |
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Supplemental disclosures to the condensed consolidated cash flows |
Net cash paid during the period for: | | | |
Interest | 178 | | | 160 | |
Income taxes, net of refunds | 272 | | | 161 | |
Net gain (loss) on sale of assets: | | | |
Cash proceeds from the sale of assets | 1 | | | — | |
Book value of these assets | — | | | — | |
Non-cash investing activities: | | | |
Non-cash capital expenditures | 243 | | | 167 | |
See accompanying notes to the Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
($ in millions, unless otherwise stated)
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| | Outstanding number of shares (in thousands) | | Common stock | | Capital in excess of par value | | Treasury shares at cost | | Accumulated other comprehensive income (loss) | | Accumulated deficit | | Total stock- holders’ equity | | Non- controlling interests | | Total equity |
Balance as of December 31, 2021 | | 264,950 | | | 56 | | | 13,727 | | | (1,932) | | | 48 | | | (5,371) | | | 6,528 | | | 242 | | | 6,770 | |
Net income (loss) | | | | | | | | | | | | 657 | | | 657 | | | 9 | | | 666 | |
Other comprehensive income | | | | | | | | | | (22) | | | | | (22) | | | | | (22) | |
Share-based compensation plans | | | | | | 92 | | | | | | | | | 92 | | | | | 92 | |
Shares issued pursuant to stock awards | | 256 | | | | | | | 51 | | | | | (23) | | | 28 | | | | | 28 | |
Treasury shares repurchased and retired | | (2,653) | | | | | | | (552) | | | | | | | (552) | | | | | (552) | |
Dividends common stock ($0.8450 per share) | | | | | | | | | | | | (222) | | | (222) | | | | | (222) | |
Balance as of April 3, 2022 | | 262,553 | | | 56 | | | 13,819 | | | (2,433) | | | 26 | | | (4,959) | | | 6,509 | | | 251 | | | 6,760 | |
Net income (loss) | | | | | | | | | | | | 670 | | | 670 | | | 13 | | | 683 | |
Other comprehensive income | | | | | | | | | | (78) | | | | | (78) | | | | | (78) | |
Share-based compensation plans | | | | | | 85 | | | | | | | | | 85 | | | | | 85 | |
Shares issued pursuant to stock awards | | 57 | | | | | | | 11 | | | | | (11) | | | — | | | | | — | |
Treasury shares repurchased and retired | | (15) | | | | | | | (2) | | | | | | | (2) | | | | | (2) | |
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Dividends common stock ($0.8450 per share) | | | | | | | | | | | | (222) | | | (222) | | | | | (222) | |
Balance as of July 3, 2022 | | 262,595 | | | 56 | | | 13,904 | | | (2,424) | | | (52) | | | (4,522) | | | 6,962 | | | 264 | | | 7,226 | |
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| | Outstanding number of shares (in thousands) | | Common stock | | Capital in excess of par value | | Treasury shares at cost | | Accumulated other comprehensive income (loss) | | Accumulated deficit | | Total stock- holders’ equity | | Non- controlling interests | | Total equity |
Balance as of December 31, 2020 | | 280,475 | | | 59 | | | 14,133 | | | (1,037) | | | 117 | | | (4,328) | | | 8,944 | | | 207 | | | 9,151 | |
Net income (loss) | | | | | | | | | | | | 353 | | | 353 | | | 11 | | | 364 | |
Other comprehensive income | | | | | | | | | | (56) | | | | | (56) | | | | | (56) | |
Share-based compensation plans | | | | | | 91 | | | | | | | | | 91 | | | | | 91 | |
Shares issued pursuant to stock awards | | 361 | | | | | | | 37 | | | | | (6) | | | 31 | | | | | 31 | |
Treasury shares repurchased and retired | | (5,087) | | | | | | | (905) | | | | | | | (905) | | | | | (905) | |
Dividends common stock ($0.5625 per share) | | | | | | | | | | | | (155) | | | (155) | | | | | (155) | |
Balance as of April 4, 2021 | | 275,749 | | | 59 | | | 14,224 | | | (1,905) | | | 61 | | | (4,136) | | | 8,303 | | | 218 | | | 8,521 | |
Net income (loss) | | | | | | | | | | | | 397 | | | 397 | | | 9 | | | 406 | |
Other comprehensive income | | | | | | | | | | 9 | | | | | 9 | | | | | 9 | |
Share-based compensation plans | | | | | | 88 | | | | | | | | | 88 | | | | | 88 | |
Shares issued pursuant to stock awards | | 64 | | | | | | | 6 | | | | | (6) | | | — | | | | | — | |
Treasury shares repurchased and retired | | (6,103) | | | | | | | (1,203) | | | | | | | (1,203) | | | | | (1,203) | |
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Dividends common stock ($0.5625 per share) | | | | | | | | | | | | (152) | | | (152) | | | | | (152) | |
Balance as of July 4, 2021 | | 269,710 | | | 59 | | | 14,312 | | | (3,102) | | | 70 | | | (3,897) | | | 7,442 | | | 227 | | | 7,669 | |
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See accompanying notes to the Condensed Consolidated Financial Statements
NXP SEMICONDUCTORS N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
All amounts in millions of $ unless otherwise stated
1 Basis of Presentation and Overview
We prepared our interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2021.
We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.
2 Significant Accounting Policies and Recent Accounting Pronouncements
Significant Accounting Policies
For a discussion of our significant accounting policies see, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2021.
Accounting standards recently adopted
No new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our Consolidated Financial Statements.
3 Acquisitions and Divestments
2022
There were no material acquisitions or divestments during the first six months of 2022.
2021
On July 6, 2021, we acquired Retune DSP for a total consideration of $15.7 million, net of closing adjustments.
4 Supplemental Financial Information
Statement of Operations Information:
Disaggregation of revenue
The following table presents revenue disaggregated by sales channel:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended | | |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 | | | | |
Distributors | 1,829 | | | 1,518 | | | 3,509 | | | 2,986 | | | | | |
Original Equipment Manufacturers and Electronic Manufacturing Services | 1,441 | | | 1,040 | | | 2,853 | | | 2,104 | | | | | |
Other | 42 | | | 38 | | | 86 | | | 73 | | | | | |
Total | 3,312 | | | 2,596 | | | 6,448 | | | 5,163 | | | | | |
Depreciation, amortization and impairment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended | | | | | | | | | | |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 | | | | | | | | | | | | |
Depreciation of property, plant and equipment | 149 | | | 135 | | | 291 | | | 267 | | | | | | | | | | | | | |
Amortization of internal use software | 4 | | | 2 | | | 6 | | | 4 | | | | | | | | | | | | | |
Amortization of other identified intangible assets 1) | 164 | | | 168 | | | 330 | | | 375 | | | | | | | | | | | | | |
Total - Depreciation, amortization and impairment | 317 | | | 305 | | | 627 | | | 646 | | | | | | | | | | | | | |
1) For the six month period ending July 4, 2021, the amount includes an impairment charge as a result of the discontinuation of an IPR&D project for an amount of $36 million.
Financial income and expense
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended | | |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 | | | | |
Interest income | 6 | | | 1 | | | 8 | | | 2 | | | | | |
Interest expense | (106) | | | (90) | | | (210) | | | (177) | | | | | |
Total interest expense, net | (100) | | | (89) | | | (202) | | | (175) | | | | | |
Extinguishment of debt | (18) | | | — | | | (18) | | | — | | | | | |
Foreign exchange rate results | 3 | | | (1) | | | 3 | | | — | | | | | |
Miscellaneous financing costs/income and other, net | (13) | | | (10) | | | (16) | | | (12) | | | | | |
Total other financial income/ (expense) | (28) | | | (11) | | | (31) | | | (12) | | | | | |
Total - Financial income and expenses | (128) | | | (100) | | | (233) | | | (187) | | | | | |
Earnings per share
The computation of earnings per share (EPS) is presented in the following table:
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| For the three months ended | | For the six months ended | | |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 | | | | |
Net income (loss) | 683 | | | 406 | | | 1,349 | | | 770 | | | | | |
Less: net income (loss) attributable to non-controlling interests | 13 | | | 9 | | | 22 | | | 20 | | | | | |
Net income (loss) attributable to stockholders | 670 | | | 397 | | | 1,327 | | | 750 | | | | | |
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Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands) | 262,579 | | | 272,686 | | | 262,837 | | | 275,145 | | | | | |
Plus incremental shares from assumed conversion of: | | | | | | | | | | | |
Options 1) | 295 | | | 394 | | | 309 | | | 406 | | | | | |
Restricted Share Units, Performance Share Units and Equity Rights 2) | 1,818 | | | 5,655 | | | 1,763 | | | 5,512 | | | | | |
Dilutive potential common shares | 2,113 | | | 6,049 | | | 2,072 | | | 5,918 | | | | | |
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Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands) | 264,692 | | | 278,735 | | | 264,909 | | | 281,063 | | | | | |
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EPS attributable to stockholders in $: | | | | | | | | | | | |
Basic net income (loss) | 2.55 | | | 1.46 | | | 5.05 | | | 2.73 | | | | | |
Diluted net income (loss) | 2.53 | | | 1.42 | | | 5.01 | | | 2.67 | | | | | |
1) There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q2 2022 and YTD 2022 (Q2 2021 and YTD 2021: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices were greater than the weighted average number of shares underlying outstanding stock options.
2) There were 0.3 million unvested RSUs, PSUs and equity rights that were outstanding in Q2 2022 and 0.3 million outstanding YTD 2022 (Q2 2021 and YTD 2021: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense were greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.
Balance Sheet Information
Cash and cash equivalents
At July 3, 2022 and December 31, 2021, our cash balance was $3,545 million and $2,830 million, respectively, of which $193 million and $208 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During both first six months of 2022 and 2021, no dividends were declared by SSMC.
Inventories
The portion of finished goods stored at customer locations under consignment amounted to $8 million as of July 3, 2022 (December 31, 2021: $12 million).
Inventories are summarized as follows:
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| July 3, 2022 | | December 31, 2021 |
Raw materials | 129 | | | 107 | |
Work in process | 1,083 | | | 846 | |
Finished goods | 250 | | | 236 | |
| 1,462 | | | 1,189 | |
The amounts recorded above are net of allowance for obsolescence of $136 million as of July 3, 2022 (December 31, 2021: $120 million).
Equity Investments
At July 3, 2022 and December 31, 2021, the total carrying value of investments in equity securities is summarized as follows:
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| July 3, 2022 | | December 31, 2021 |
Marketable equity securities | 10 | | | 18 | |
Non-marketable equity securities | 10 | | | 19 | |
Equity-accounted investments | 88 | | | 75 | |
| 108 | | | 112 | |
The total carrying value of investments in equity-accounted investees is summarized as follows:
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| July 3, 2022 | | December 31, 2021 |
| Shareholding % | | Amount | | Shareholding % | | Amount |
SMART Growth Fund, L.P.1) | 8.41 | % | | 44 | | | 8.41 | % | | 31 | |
Others | — | | | 44 | | | — | | | 44 | |
| | | 88 | | | | | 75 | |
1) Previously named “Wise Road Industry Investment Fund I, L.P.” | | | | | | | |
Results related to equity-accounted investees at the end of each period were as follows:
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| For the three months ended | | For the six months ended |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 |
Company's share in income (loss) | (3) | | | (2) | | | 8 | | | (3) | |
Other results | — | | | — | | | 1 | | | — | |
| (3) | | | (2) | | | 9 | | | (3) | |
Other current liabilities
Other current liabilities at July 3, 2022 and December 31, 2021 consisted of the following:
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| July 3, 2022 | | December 31, 2021 |
Accrued compensation and benefits | 463 | | | 476 | |
Income taxes payable | 134 | | | 82 | |
Dividend payable | 222 | | | 149 | |
Other | 648 | | | 468 | |
| 1,467 | | | 1,175 | |
Accumulated other comprehensive income (loss)
Total comprehensive income (loss) represents net income (loss) plus the results of certain equity changes not reflected in the condensed consolidated statements of operations. The after-tax components of accumulated other comprehensive income (loss) and their corresponding changes are shown below:
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| Currency translation differences | | Change in fair value cash flow hedges | | Net actuarial gain/(losses) | | Accumulated Other Comprehensive Income (loss) |
As of December 31, 2021 | 207 | | | — | | | (159) | | | 48 | |
Other comprehensive income (loss) before reclassifications | (87) | | | (24) | | | (1) | | | (112) | |
Amounts reclassified out of accumulated other comprehensive income (loss) | — | | | 8 | | | — | | | 8 | |
Tax effects | — | | | 4 | | | — | | | 4 | |
Other comprehensive income (loss) | (87) | | | (12) | | | (1) | | | (100) | |
As of July 3, 2022 | 120 | | | (12) | | | (160) | | | (52) | |
Cash dividends
The following dividends were declared during the first two quarters of 2022 and 2021 under NXP’s quarterly dividend program:
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| Fiscal year 2022 | | Fiscal year 2021 |
| Dividend per share | | Amount | | Dividend per share | | Amount |
First quarter | 0.845 | | | 222 | | | 0.5625 | | | 155 | |
Second quarter | 0.845 | | | 222 | | | 0.5625 | | | 152 | |
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The dividend declared in the second quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of July 3, 2022 and was subsequently paid on July 6, 2022.
5 Restructuring
At each reporting date, we evaluate our restructuring liabilities, which consist primarily of termination benefits, to ensure that our accruals are still appropriate.
The following table presents the changes in restructuring liabilities in 2022:
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| As of January 1, 2022 | | Additions | | Utilized | | Released | | Other changes | | As of July 3, 2022 |
Restructuring liabilities | 37 | | | 1 | | | (8) | | | (5) | | | (1) | | | 24 | |
There were no significant restructuring costs incurred for both six month periods ended July 3, 2022 and July 4, 2021 and the utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years.
These restructuring charges recorded in operating income, for the periods indicated, are included in the following line items in the statement of operations:
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| For the three months ended | | For the six months ended |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 |
Cost of revenue | (3) | | | — | | | (3) | | | — | |
Research and development | (1) | | | 1 | | | (2) | | | 1 | |
Selling, general and administrative | — | | | — | | | — | | | — | |
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Net restructuring charges | (4) | | | 1 | | | (5) | | | 1 | |
6 Income Taxes
Benefit/provision for income taxes:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the six months ended | | |
| July 3, 2022 | | July 4, 2021 | | July 3, 2022 | | July 4, 2021 | | | | |
Tax expense (benefit) | 129 | | | 65 | | | 243 | | | 105 | | | | | |
Effective tax rate | 15.8 | % | | 13.7 | % | | 15.4 | % | | 12.0 | % | | | | |
Our provision for income taxes for the first six months of 2022 was $243 million (15.4% effective tax rate) compared to a provision from income taxes of $105 million (12.0% effective tax rate) for the first six months of 2021. The increase in the income tax expense was due to higher income before income taxes as a result of the improved operational performance of the company which was partly offset by an increase in tax incentives also taking into account the effect of specific US tax law that became effective as from 2022. In addition to this, in the first six months of 2021 there were income tax benefits due to changes in estimates of prior positions and a net change in the valuation allowance.
The Company benefits from income tax incentives in certain jurisdictions which provide that we pay reduced income taxes in those jurisdictions for a fixed period of time that varies depending on the jurisdiction. The predominant income tax holiday is expected to expire at the end of 2026. The impact of this tax holiday decreased foreign income taxes for the second quarter of 2022 by $4 million and decreased by $3 million for the second quarter 2021 (YTD 2022: a decrease of $7 million and YTD 2021: a decrease of $7 million). The benefit of this tax holiday on net income per share (diluted) was $0.02 for the second quarter of 2022 (YTD 2022: $0.03) and $0.02 for the second quarter of 2021 (YTD 2021: $0.03).
7 Identified Intangible Assets
Identified intangible assets as of July 3, 2022 and December 31, 2021, respectively, were composed of the following:
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| July 3, 2022 | | December 31, 2021 |
| Gross carrying amount | | Accumulated amortization | | Gross carrying amount | | Accumulated amortization |
In-process R&D (IPR&D) 1) | 53 | | | — | | | 96 | | | — | |
Marketing-related | — | | | — | | | 81 | | | (81) | |
Customer-related | 849 | | | (345) | | | 852 | | | (325) | |
Technology-based | 3,736 | | | (2,766) | | | 3,686 | | | (2,615) | |
Identified intangible assets | 4,638 | | | (3,111) | | | 4,715 | | | (3,021) | |
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1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort. |
The estimated amortization expense for these identified intangible assets for each of the five succeeding years is:
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2022 (remaining) | 308 | |
2023 | 436 | |
2024 | 251 | |
2025 | 133 | |
2026 | 69 | |
Thereafter | 330 | |
All intangible assets, excluding IPR&D and goodwill, are subject to amortization and have no assumed residual value.
The expected weighted average remaining life of identified intangibles is 4 years as of July 3, 2022 (December 31, 2021: 4 years).
8 Debt